Discontinued Operations and Assets Held for Sale

3 Months Ended

Mar. 31, 2023

Discontinued Operations and Assets Held for Sale [Abstract]

DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

NOTE 9 – DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

The Board of Directors of authID considers it in the best interests of the Company to focus its business activities on providing biometric authentication products and services by means of our proprietary Verified platform. Accordingly, on May 4, 2022, the Board approved a plan to exit from certain non-core activities comprising the MultiPay correspondent bank, payments services in Colombia and the Cards Plus cards manufacturing and printing business in South Africa.

Cards Plus business in South Africa

The financial statements of Cards Plus are classified as a discontinued operation and an asset held for sale, as all required classification criteria under appropriate accounting standards were met as of June 30, 2022.

On August 29, 2022, the Company completed the sale of Cards Plus for a price of $300,000 of which $150,000 was received and the remaining balance of $150,000 recorded in other current asset is expected to be received within one year, less $3,272 in costs to sell, and recognized a loss of $188,247 from the transaction.

MultiPay business in Colombia

The Company is exiting the MultiPay business in Colombia in an orderly fashion, honoring our obligations to employees, customers and under applicable laws and regulations. We maintain our customer support and operations team in Bogota, which performs essential functions to support the global operations of our Verified product.

As of March 31, 2023, all impacted employees had left the Company. MultiPay is leasing out its software to its one major customer and working to finalize the sale of the Company’s proprietary software to this same customer. The transaction is expected to complete by June 30, 2023.

The operations of Cards Plus and MultiPay for the three months ended March 31, 2023 and 2022 on a consolidated basis are below (unaudited):

	Three Months Ended March 31,
Discontinued Operations	2023			2022
Discontinued Operations Total Revenues, net	$	14,095		$	442,310
Operating Expenses:
Cost of sales		-			183,524
General and administrative		12,268			285,383
Impairment loss		-			143,703
Depreciation and amortization		3,909			28,202
Total operating expenses		16,177			640,812
Loss from operations		(2,082	)		(198,502	)
Other Income (Expense):
Other income		224			3,695
Interest expense, net		-			(364	)
Other income, net		224			3,331
Loss before income taxes		(1,858	)		(195,171	)
Income tax expense		(397	)		(1,349	)
Loss from discontinued operations	$	(2,255	)	$	(196,520	)

	Three Months Ended March 31,
	2023		2022
Cards Plus
Total Revenues, net	$	-	$	373,158
Operating Expenses:
Cost of sales		-		183,524
General and administrative		-		155,310
Impairment loss		-		143,703
Depreciation and amortization		-		21,230
Total operating expenses		-		503,767
Loss from operations		-		(130,609	)
Other Income (Expense):
Other income (expense), net		-		3,348
Interest expense, net		-		(364	)
Other income, net		-		2,984
Loss before income taxes		-		(127,625	)
Income tax expense		-		4,681
Loss from discontinued operations	$	-	$	(122,944	)

	Three Months Ended March 31,
	2023			2022
MultiPay
Total Revenues, net	$	14,095		$	69,152
Operating Expenses:
General and administrative		12,268			130,073
Depreciation and amortization		3,909			6,972
Total operating expenses		16,177			137,045
Loss from operations		(2,082	)		(67,893	)
Other Income:
Other income		224			347
Other income		224			347
Loss before income taxes		(1,858	)		(67,546	)
Income tax expense		(397	)		(6,030	)
Loss from discontinued operations	$	(2,255	)	$	(73,576	)

As a result of meeting the discontinued operations/assets held for sale criteria for the MultiPay operations, the assets and liabilities have been reclassified as assets held for sale as of the respective balance sheet date as follows:

	March 31, 2023 (unaudited)		December 31, 2022
Discontinued Operations Current Assets:
Cash	$	3,025	$	2,703
Accounts receivable, net		61,646		105,194
Other current assets		-		10,562
Current assets held for sale		64,671		118,459
Noncurrent Assets:
Property and equipment, net		23,685		27,595
Noncurrent assets held for sale		23,685		27,595
Total assets held for sale	$	88,356	$	146,054
Current Liabilities:
Accounts payable and accrued expenses	$	17,795	$	13,759
Total liabilities held for sale	$	17,795	$	13,759

As a result of meeting the discontinued operations/assets held for sale criteria for Cards Plus and the MultiPay operations, the cash flow activity related to discontinued operations is presented separately on the statement of cash flows as summarized below (unaudited):

	Three Months Ended March 31,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income loss	$	(2,255	)	$	(196,520	)
Adjustments to reconcile net income loss with cash flows from operations:
Depreciation and amortization expense		3,909			28,202
Impairment of intangible assets		-			143,703
Changes in operating assets and liabilities:
Accounts receivable		41,987			(27,464	)
Net investment in direct financing lease Leases		-			28,271
Other current assets		10,562			(351	)
Inventory		-			(227,669	)
Accounts payable and accrued expenses		4,036			285,949
Deferred revenue		-			(4,872	)
Adjustments relating to discontinued operations		60,494			225,769
Net cash flows from discontinued operations	$	58,239		$	29,249

Notes to Financial Statements – Discontinued Operations

Revenue Recognition

Cards Plus – The Company recognized revenue for the design and production of cards at the point in time when products are shipped, or services have been performed due to the short-term nature of the contracts. Additionally, the cards produced by the Company have no alternative use and the Company has an enforceable right to payment for work performed should the contract be cancelled.

MultiPay recognizes revenue for variable fees generated for payment processing solutions that are earned on a usage fee over time based on monthly transaction volumes or on a monthly flat fee rate. Additionally, MultiPay also sells certain equipment from time to time for which revenue is recognized upon delivery to the customer.